October 31, 2012

Evan Osnos of the New Yorker writes a dryly amusing column on the fallout of the NY Times’ exposee of the wealth of Wen Jiabao’s family members. Some in China see it as a massive conspiracy from the likes of Bo Xilai to feed the Times damaging information about Wen. Others indignantly claim it’s an intentional smear against all of China (big surprise). My favorite reaction is from those who say “What’s the big deal?” Osnos responds:

One of the standard lines going around in recent days has been the notion that this subject is somehow old news, that people already “knew” that Chinese leaders benefit from public office, so why bother? To me, that’s akin to saying that since we “knew” that campaign finance corrupts American government, we shouldn’t have bothered to unearth the crimes of the lobbyist Jack Abramoff; and since we “knew” British tabloids would walk a fine line to get a story, we shouldn’t have gotten so exercised about digging out the details of phone-hacking and the paying of police for information.

These reactions are designed to brush the story away, as is the blocking of the NYT website. Check out the column; the closing lines are killer.

Please. The Lee article is a masterpiece of hand-waving (only the 2.2 Billion in Ping An really matters, apparently), blame-spreading (it’s really Duan’s fault, so the Wens aren’t really to blame), and false equivalence (people on the New York and London stock exchanges engage in hiding the ball, so it doesn’t matter that the family of the guy running a country is doing it). Only a fenqing could try this kind of nonsense and expect people to be convinced by it.

Au contraire, you’re not even arguing against the logic of Peter’s article, only assigning thought-terminating cliches (hand-waving, blame-spreading, false equivalence) to a few cherry-picked claims and saying that the entire article is wrong.

Normally I wouldn’t care that you’re doing this, but I’ve seen what sort of proper rebuttal you can do when you’re not lazy. Try harder.

———

Yes, there is a lot of wealth held by people close to Wen. What Barboza hasn’t proven though is 1) whether that wealth came about as a direct result of Wen’s influence or even any improper influence at all and 2) whether that wealth is even actually the property of Wen. All Barboza seems to be doing is implying that both are true because the individuals are close to Wen, but to continue to draw that implication without actually offering a clear yes or no on the issue is irresponsible journalism.

“There is another group that definitely feels thrilled and empowered by the New York Times’ blockbuster revelation concerning an alleged US$2.7 billion nest egg possessed by Premier Wen

Jiabao’s family. [1] That group is not China’s dissidents. It is Western print journalists, who feel under siege around the world, and especially in China. The Guardian’s media critic, Michael Wolff, took it to the next level, calling the revelations the biggest thing since the Pentagon Papers . . .

Actually, I think David Barboza’s expose of wealth aggrandizement by the extended friends and family of Wen Jiabao might be the biggest thing in journalism since … the Guardian’s unconscionable butchering of the WikiLeaks release, but that’s another story.

This is a pretty strong accusation (i.e., the media is celebrating over this because they feel under siege in China, the NYT actually fluffed the story) but he doesn’t go on to say anything to substantiate this.

“barring further revelations – it is not the devastating legal and factual brief against Wen Jiabao that the excited coverage might lead one to believe. The New York Times made the understandable, if rather questionable decision, to hang its hat on the eye-popping figure of $2.7 billion, inviting the inference that Wen’s family exemplified official corruption on a truly heroic scale.

The fact that the vast majority of this money was made after Wen’s ascent to power, and is held by people who are very unlikely to have created it themselves is what creates this inference.

“However, $2.2 billion of that figure is derived from ownership of shares of stock of Ping An Insurance imputed to members of the Wen family, shares that were purchased by partnerships in 2002, apparently for around $65 million, and which skyrocketed in value after Hong Kong (2004) and Shanghai (2007) IPOs.”

Here’s where the ‘only the 2.2 Billion matters’ bit comes in – the remaing 500 Million USD is apparently peanuts.

“As for those partnerships, the Times was unfortunately unable to come up with a clear determination as to whether they were simply front companies for Wen family skullduggery or, well, partnerships that provided privileged access for wealth creation for PRC and foreign elites, some of whom were members of the Wen family.”

The second option is just a re-phrasing of the first. And let’s be clear, the obfuscation as to who was holding the shares was indiciative of the use of a front company.

“The question can seriously be raised as to whether Mdme Duan is simply a bag-woman for the Wen family, or a close family friend who has benefited herself – and members of the Wen family – through a carefully constructed, morally questionable, but legally defendable web of obligation and opportunity.”

Again, the second option is just a nicer-sounding re-phrasing of the first.

“The Ping An deal shows the hallmarks of privileged information and access; it does not, however, exhibit significant signs of interference by the Wen family to assure Ping An’s success.”

Why is this relevant? He seems to be saying “sure, it looks like insider trading, but at least they didn’t rig the deal”.

“In short, Ping An’s primary identity is as a private company backed by international financial muscle, not a sclerotic state-owned-enterprise relying on government favoritism and protection. Therefore, the corrupt-dealing framing provided for the Times article is, perhaps, not completely apt to the Ping An situation”

This is a non-sequitor. The obvious inference from the NYT’s story is that Wen’s family made use of inside connections and political influence to create fortunes by investing in the company. The actual nature of Ping An is irrelevant to this – the NYT did not say that Ping An is a state-owned industry or company that received sweet-heart deals from government. That is a factor in the remaining 500 million though.

It’s also worth noting – it’s the fact that Ping An’s records are publicly available that means that the Wen family’s dealings with it may be identified.

“Mdme Duan blotted her tycoon copybook, however, with a flustered response to the most damning piece of evidence unearthed by Barboza: apparently part of Taihong/Great Ocean’s stake in Ping An was held in the name of Premier Wen’s ancient mother. . . .

It can be assumed that the purpose of this legerdemain was not to enrich Wen Jiabao’s oblivious mother. Perhaps the motive was to park some shares in the name of a clueless retail investor – one who would not be subject to the lock-up obligations imposed on strategic and institutional investors in the Ping An IPO – for prompt disposition at a favorable price.

Firstly the shares were not only in the name of Wen’s mother, but in the names of multiple family members. Secondly there doesn’t seem to be any reason to assume that this wasn’t about familial enrichment (Nb. – who inherits Yang Zhiyun’s shares after her death?). Thirdly, if this was a temporary state of affairs, how come she was holding the shares in 2007, five years after the intial investment? And what of the procedes of the shares sold in the name of other Wen family members?

“Judging from the long list of business ventures described by Barboza – which even absent the Ping An shares amount to interests amounting to hundreds of millions of dollars – the greedy members of Wen Jiabao’s immediate family (led by Wen’s wife, brother, and son) were careful not to demand or take payoffs as a condition for deploying political influence. No “pay for play” in other words.”

Is it really possible to make that kind of judgement based on the list of companies? I don’t think so – all you can see is the value held and in which companies.

“Instead, the currency employed was that of shared opportunity, mutual obligation, and the promise of future cooperation.”

Excuse me if I don’t see the difference between the two here. The influence that the Wen family appear to have been excercising here is Wen Jiabao’s political influence, whether the pay-off is immediate or in the future is immaterial to this.

Nor did the immediate family hold assets in their own names – high party officials are required to disclose their own assets and those of close family members – allegedly relying instead on the good offices of a network of trusted relatives and associates.”

Actually we don’t know this because we don’t know what Wen disclosed to the CCP.

“In other words, the Wen family appears to have navigated the loopholes, opportunities, and perilous shoals of personal enrichment in an adroit, legalistic, and politically astute fashion that would be recognized and admired immediately by their spiritual brothers and sisters across the sea: the robber barons of Wall Street and the London bourse.”

False equivalence – the reason this story stinks is because of the fact that the people involved are close relations of a national leader. Moreover, we don’t know whether the enrichment was legal (innocent until proven guilty etc.), but we do know that it appears very un-adroit and politically non-astute now.

As I said, t_co, my impression is that you are in damage control mode, and the damage in question are the NYT revelations about Wen Jiabao’s family, and the questions they raise about the political “culture” more in general. Your comment #6 on the previous thread on this topic: “You seem to be implying that the only way they got into business was because of their familial connections” – in reply to Raj’s “Maybe they shouldn’t have gone into business and got an ordinary salaried job”. It’s flat denial to suggest that there was no link between Wen Jiabao’s son’s achievements and Wen’s political role as chief state councillor. Then try a google search on sewage treatment in Chinese and Wen Jiabao speeches. Now, tell me that Wen’s younger brother and his company had no advantage when it came to the related projects – and make me laugh. Then the Ping An issue as addressed by Peter Lee (see Foarp’s #66 reply to that), and the ad hominem accusation against slim as he calls Lee a thinking man’s fenqing. Granted – I’d rather refer to Lee as the thinking fenqing’s favorite journalist, but that difference is rather subtle.

If there’s something slippery, it’s how Lee congratulates the NYT on the one hand, and then points out how the whole thing wasn’t that big after all. It’s big in that it runs counter to the idea that this or that quarter of the CCP was “clean”, especially Wen himself – a supposedly indefatigable fighter against corruption. Lee’s let’s-look-into-the-likelihood-of-the-allegations-one-by-one approach simply does what the NYT had done before.

“[T]he Times was unfortunately unable to come up with a clear determination as to whether they were simply front companies for Wen family skullduggery or, well, partnerships that provided privileged access for wealth creation for PRC and foreign elites, some of whom were members of the Wen family” (Lee)? Tell you what: those “leading communists” are unable to come up with a clear picture of their share in China’s economic growth. The NYT deserves credit for every issue it has shed light on, and they have accounted for what is for sure, and what are their own conclusions. If the CCP leaders were about as accountable, they wouldn’t have to fear reports like these to the degree they do.

Then your comment #221 on the same thread, as Richard re-opened the thread:“Somchai is posting flamebait and he knows it. Not sure why you’d reopen a comment thread to let someone post what is essentially an extended ad hominem.”.

That, plus your idea that news about Xi Jinping’s financial situation shouldn’t have been reported, as it would lead to “a lot of their mainland sources .. no longer talk(ing) to them”. As if that should stop news people from doing their job.

These repeating patterns lead to my impression that your main interest is to see reports like these – be it Bloomberg, be it the NYT – or their impact limited.

That, Richard, is the beauty of having a political system based on “5000 years of history” and seemingly completely unchanged since then and unprepared for the modern age of instant communication. What the top echelons in Zongnanhai do these days in power transitions might have worked even as recently as the Qing era but now leave themselves completely open to any old rumour that can do the rounds internationally.
Of course, completely blocking the NYT (bit of a pisser as I’ll be in China this January on holiday) because it “blackens China’s name and has ulterior motives” (not blackening Wen, you understand, blackening all of China!) isn’t something an innocent would say, is it?

Want China Times has an interesting take on the Wen family financial problem based on Wikileaks information:
“A US diplomatic cable leaked by whistleblowing website WikiLeaks claims that China’s premier, Wen Jiabao, has been troubled by his family’s questionable financial dealings for at least the past five years.

The business activities of Wen’s family were brought under the spotlight last week after the New York Times published an article claiming that relatives including Wen’s mother, wife and children control hidden wealth in excess of US$2.7 billion. China’s foreign ministry condemned the article as a smear campaign, while Wen’s son Wen Yunsong, otherwise known as Winston Wen, retained two lawyers to study the possibility of a defamation lawsuit.

It now appears that Wen had known for quite some time that the scale and provenance of his family’s wealth might come back to haunt him. In a confidential telegram dated Sept. 20, 2007, the deputy principal officer of the US consulate in Shanghai, Simon Schuchat, referenced a source who claimed that the business operations of Wen’s family is “a major political headache” for the premier.

In a section titled “Wen Jiabao: Chain of Fools,” Wen’s wife Zhang Peili was described as a heavyweight in China’s jewelry industry, having once worked as a high-level official of top diamond trading firm Daimengde. Though Zhang resigned from her position after Wen was named premier in 2003, it was “in name only” and she remains “very influential in the industry,” the telegram said.

The document also mentioned that Wen’s daughter, Wen Ruchun, worked for the Beijing branch of global financial services firm Credit Suisse for a year, while his son Winston ran an investment fund.

“Wen’s wife and children all have the reputation as people who can ‘get things done’ for the right price,” said the report, which was published by WikiLeaks in 2009.

The source stopped short of accusing Wen’s family of taking bribes but said they are “amenable to accepting exorbitant ‘consulting fees’ or selling inferior diamonds at a significant mark-up.”

The section concluded by saying that Wen is “disgusted with his family’s activities but is either unable or unwilling to curtail them,” adding that he would like to divorce his wife but is “constrained” by the prominence of his political position.

The name of the source was redacted in the leaked document, although according to Duowei News, an outlet run by overseas Chinese, the source was a China-born high-level executive of an American corporation in Shanghai.

The revelations formed part of a confidential US report looking into Chinese leaders in the lead up to China’s 17th National Congress, held in October 2007. The 18th National Congress, where Wen and his cohort are expected to step aside to make way for the next generation of Communist Party leaders, is scheduled to commence in Beijing next week.”

The Asia Times publishes a lot of flakey stuff, conspiracy theories and even a monthly dose of straight-up North Korean propaganda. Even more than other such sites, a reader has to work hard to find quality there amid the dross.

Wen and almost every other coummunist party member are the arch traitors of the Chinese nation. Worse than Wu sangui or Wang jingwei because their race treason is self manifesting rather than having an outside provenance. The regeneration of the Han race will begin only once they and their families have been exterminated to the 10th degree. My only question is which western nation they will seek to run to and if that snakes are willing to shelter the rats.

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A peculiar hybrid of personal journal, dilettantish punditry, pseudo-philosophy and much more, from an Accidental Expat who has made his way from Hong Kong to Beijing to Taipei and finally back to Beijing for reasons that are still not entirely clear to him…